Lack Of Funds Weakens Bite Of Disclosure Act

July 23, 1989|By Tamara Starks.

An Illinois law intended to inform buyers of the environmental condition of industrial and commercial property goes into effect Nov. 1, but state officials say the impact of the act will be lessened because it fails to provide additional funding for the Illinois Environmental Protection Agency.

The Responsible Property Transfer Act of 1988 was drafted by an Illinois State Chamber of Commerce coalition and passed unanimously by the General Assembly. It requires that sellers complete a disclosure form that provides buyers with information about the environmental condition of certain commercial and industrial properties, mainly those with underground storage tanks, or where hazardous chemicals have been stored.

A copy of the disclosure document also must be filed with the Illinois EPA and the county recorder of deeds upon completion of the transaction. But the state agency does not have the funds needed to follow up on the disclosure reports it receives, a spokesman said.

``We originally planned to receive the reports and do some preliminary investigations,`` said Jim Frank, manager of the Illinois EPA`s remedial projects management section. ``We would have red-flagged some reports and done field inspections.``

Frank said because no money is available in the agency`s current budget, the Illinois EPA cannot afford the six extra staff members and lab work needed for the site inspections. He said when the law was passed during the 1988 legislative session, it contained no specific appropriation to allow the agency to implement the site inspections and no federal funds are available for this type of project.

``We are willing to cooperate and act on these reports if someone provides the resources,`` Frank said.

He added that the agency fears that the new act might create a false sense of security among buyers who may believe the EPA will act on the reports they receive.

``There may be some added cleanup because the seller makes this disclosure, but we currently have no resources to act on the reports,`` he said.

But the Illinois EPA`s lack of funding will not interfere with the primary intent of the act, said Eric Canada, director of economic development for the Illinois Chamber of Commerce.

Canada said the law`s main purpose is to provide buyers with a report on the condition of the property and inform all parties involved in the transfer that existing environmental laws may apply to the land. He added that completing the form will not require an environmental audit because most of the information should be available readily to the property owner.

However, according to Kevin Greene, research director of Citizens for a Better Environment, buyers may want to request an environmental audit before finalizing the transaction.

``Buyers must be very careful and not just rely on the disclosure form,`` Greene said. ``We would urge most buyers to contract a consultant to do soil testing. The disclosure form provides good information, but there are some problems that won`t be obvious on a visual walk through.``

While the environmental group supports the new law, Greene said its members believe that it also should call for a mandatory clean-up of any environmental problems discovered during the disclosure process.

``It basically leaves it up to the buyer and seller to work out the details,`` Greene said. ``The problem could be allowed to fester until it causes an adverse situation at a later date.``

Greene said that current laws only require a mandatory clean-up if a site presents an imminent threat to public health, such as the potential contamination of ground water.

``We would prefer to see some preventive measures to deal with the problem before it gets to that stage,`` Greene said.

He added that his organization wanted the law to call for a mandatory EPA inspection of the site and supervised clean-up if any problems are discovered. But Canada said this type of law was considered and rejected by the coalition that drafted the new act. He said the Illinois law came in response to an initiative from New Jersey that called for its state EPA to inspect and approve all industrial and commercial land transfers before the closing of the sale.

``Their plan was unacceptable to the Illinois Chamber of Commerce,``

Canada said. ``It interjected a regulatory agency. Even with a clean site it could take up to 18 months to get approval. You can`t hold up real estate transactions that long.``